Subject: File No. S7-28-09
From: Diane L Ritter, Ms.

December 30, 2009

The proposed rule changes seem completely inadequate to deal with this problem. I have three suggestions to improve the process of rating "structured finance products".

#1) Require that "structured finance product" offerings be rated by ALL the NRSROs instead of allowing the offering company to chose the NRSRO rating the product. This would increase the cost, but it would insulate the NRSROs from their current strong financial incentives to give good ratings to get future business. It would also eliminate the ability of companies to "shop" for ratings. It would also (possibly) have the advantage of embarrassing any NRSRO that did not perform a through analysis of the offering. A NRSRO which consistently failed to note and highlight problem areas brought forward by other NRSROs would be shown up as lacking in care or analytical ability. This might provide some reputational incentive for diligence.

A second possibility would be to have the SEC hold a random drawing to select the NRSRO to rate each "structured finance product" instead of allowing the company to select the NRSRO to rate it's product. This wouldn't be as good as having all the NRSROs rate the product, but it would reduce the cost somewhat.

#2) I would also STRONGLY recommend that the NRSROs no longer be allowed to hide behind the "freedom of the press" defense. Their ratings are not "journalistic opinions", they are, or should be, informed, professional judgments, and they should have to stand behind them in a court of law, most especially for cases of NEGLIGENCE, such as were clearly displayed in their failure to investigate the quality of underlying mortgages.

#3) Require that NRSROs specialize either in normal credit rating or in the rating of structured finance products. This is the only way to insure that companies have no financial leverage on the NRSROs performing the rating of the structured finance products. As long as companies are free to provide NRSROs with copious amounts of business rating normal credit offerings, they will have a financial hold over the NRSROs that they can use to pressure it to give them the ratings they desire for their structured finacne products.

These may seem like extreme measures, but it is clear from recent events that the NRSROs as presently constituted are a serious menace to the financial security of our entire nation, indeed to the entire world.